tv Rosemary Gibson China Rx CSPAN March 23, 2020 11:19pm-12:51am EDT
good afternoon. eyeing the dean of the institute school of public health and i'm delighted to have everyone join us today for this discussion. we have the author of an incredibly important book here, rosemary gibson. her book is the topic of a dramatic shift in where our madison's come from. china looks at the position as a pharmacy of the world. i think any of us in the public health profession have been unaware of the shift. we may notice on time but there are shortages and contamination issues and other problems but i think that it is we have not been aware there is a systematic
issue, a major change in the system for manufacturing pharmaceuticals. the implications of one country and the supply of medicines were astounding no matter what country we may be talking about. think about it. what if there is a global pandemic and it's hard to lose products across the world. but if there are heightened tensions within the south china sea. everyone could be vulnerable and put at risk. the role of the fda in this situation can't be overstated because the fda cannot be as effective in assuring the safety of the medicines and areas of the world as it can at home. many of us are not aware of the safe debate co- face-to-face contact that the fda has with those that are manufacturing our drugs, the inspections they conduct, the very hands-on work
that is involved in making sure that the manufacturers drugs are safe. they certainly set up offices all over the world to do that and that is not the same as having offices, having manufacturers in your own country. and with the u.s. losing the manufacturing capacity, which is continuing to happen, the situation could become even more severe. today we will discuss these issues as well as possible solutions, and i look forward to very robust discussions. first, let me introduce to you rosemary gibson. rosemary gibson is the senior adviser at the hastings center and the principal author of exposing the risks of america's dependence on china for medicine. she's the recipient oshe is thee highest honor from the american medical writers association in 2014. for getting the public's voice
into their interest to the critical health issues of the day. she gave a 2015 lecture that we hold annually at the school of public health. the foundation rosemary was the chief architect of the 250 million-dollar decade on national strategy to establish inpatient palliative care programs that number 1600 she received a lifetime achievement award from the academy of hospice and palliative medicine and worked with bill moyers on pbs documentary on our own terms. the recipient of the patient safety award from the south carolina hospital association. rosemary is also the principal author of medicare knockdown in 2013. the battle over health care, treatment and the wall of silence. her books have been reviewed in publishers weekly, "washington post," health affairs, proceedings of the senate,
congressional testimony, noted in the journal, "new york times," usa today, consumer reports and another outlets too numerous to count. the chair of the board of the institute a nonprofit research organization headquartered in ann arbor michigan. she graduated from georgetown university and has a master's degree from the london school of economics. please join me in welcoming rosemary gibson. [applause] >> should i take over for now backs is the microphone working okay, wonderful. thank you gentlemen and ladies. good afternoon everyone. doctor goldman, i want to thank you for making this event possible. it is a very timely and it is fitting that we are sitting here at school of health in the nations capital to discuss the
public health implications as well as the national security risks associated in the growing dependence on a single country for our madison. it's timely for another reason. the president is safe to give a major speech in the coming days and weeks about the drug prices. we know many americans are suffering under the burden of the high cost of medicine. but we have to be mindful of unintended consequences. companies might feel pressured to reduce the prices and reduce their cost which could potentially drive more manufacturing to china subject to keep a close eye. there's one lesson we draw from today it's the intersection of the medicine and trade and trade policy and who would have ever thought about.
i wrote this with the purpose of informing the public about this very makeshift in where our medicines are coming from. for many of us our medicines were made herein to u.s. and japan but now there's been a dramatic shift eastward. and they wrote it for my mother so my mother could read it but also for the policy wonks and academics because i think we all need access to this information. we want to trust the medicines that we take. the medicines that could mean the difference between life and death. and we need to know where our medicines come from. why are we dependent increase in the own a single country. what are the risks and what can we do about it. i was going to bring my smartphone and medicine bottles of make believe i have it here. one of the questions i get asked the most is how come i didn't
know about this. how come i didn't know that there is growing dependence in the united states on china for so many of our medicines. if you take a look at your smartphone handbook o on to at least mine says he signed in california and assembled in china. if you've ever gotten those plastic bottles with the white caps but you have to take your medicine and with the dosage is that it doesn't tell you where it comes from so there is no reason that we should know. let me tell you about this dramatic shift and where the medicine comes from and what looks like. one of the first things we've done that has never been done before is the actually name the medicine that are being made in china by the chinese companies and sold here in the united states. they include antibiotics, antidepressants, birth control pills. a lot of young women are interested in knowing that. medicines for alzheimer's,
parkinson's, epilepsy, high blood pressure, hiv-aids and much more. right now china is just beginning to get into the manufacturing of genetic drugs. but it has a plan to become the pharmacy to the world and i predict within a decade, maybe less or maybe more, china could overtake india as a dominant generic drug manufacturer. right now, the biggest footprint in the united states is making the active ingredients in so many of our madison. they are a part of our medicines that give us the therapeutic value and they make thousands of active ingredients for many of the medicines we find in our medicine chests and hospitals over the country.
many people we spoke to both former government officials and from the industry said if china should work on exports within the, pharmacies and the united gates would be empty and hospitals would cease to function. so, how did we get here? and what about other countries? one of the interesting fact is that factsthat i learned is evea which is a dominant generic drug manufacturer, even india is dependent for the active ingredients and for all materials and in many of the medicines it makes. only not only for its own people but also for exports. there is a fascinating article in the newspaper that started out with a story of a soldier who's on the border between india and china. they share a border and there is
a lot of tension in that part of the world. and so it says something to the effect a soldier on the border opens up his medical pack and sees this medicine and he is running out and dependent on the people on the other side of the border, the adversary for the components to make essential medicines. that is a fascinating situation. the article went on to say this is a national security issue. i have yet to see an article here in the united states posing that question and talking about that here, and i applaud the media for being transparent about it in if there's any interruption in supply that would not only affect the health of the population, the military, but also a very important part of their economy because as you know, they make and export many generic drugs. the so where are we and what is the biggest risk?
is when we have the centralization of the concentration of so much of the medicine within a single count country. if the companies are shut down for months and months and if there is a global pandemic and countries have to line up for medicine, that could be a global test' or the tension in the south china sea is a hot spot right now where does that leave us that is the challenge with concentrating any imported product that we need. so how did we get here? how did this happen? let me start with the prescription i got two months ago today. it was an antibiotic. it was amoxicillin. i was back to my old self.
in the making of that particular product the government into thee industry including companies like pfizer made sure there was enough manufacturing capacity here in this country to help all of the wounded soldiers that would walk away from that event and by having that penicillin availability. the government and industry work together to ensure we have an adequate supply of that miracle drug. so let's fast forward a couple of decades in 2004 "the new york times" reported the last penicillin manufacturing plant in the united states was about
to shut down. but they didn't back story. what was really going on in the global market that triggered dot? thanks to some producers that are spirited and have information on the internet about what happened in the period we can learn a little bit about what was going on in the global market. in 1980, china invested heavily in penicillin capacity on a number of scales. 20 years later, we begin to see the chinese companies coming in on the global market and they dumped penicillin at the low market prices and it effectively drove out american european and
even indian companies from the business because they could not compete. the producers called this a landslide definition of their industry and then what happened there was a spectacular price increase for all of us in some way paid for. that is the only cartel that was happening. if you read about the vitamin c cartel i'm sure many of you take vitamin c. you might take a tablet. it doesn't come from oranges, it is made in a chemical plant probably in china where there's a fascinating story about the vitamin c cartel. it's the same playbook as
americans, europeans and japanese producers of ascorbic acid and a couple of companies dumped it on the world market and drove out competitors and when they were gone they raised the price again spectacularly. with antitrust we could have a whole session today on the cartel because that story continued and there's enormous implications for a lot of our medicines and other products we get from china so we have these penicillin and vitamin c cartel's and what does this tell us if told us that we are losing control over the supply of our madison. as a country we are losing control and others are dictating the price and the supply. we have to ask is this a
situation that we want to be in. what was driving this and won't for some undercurrent to? we identified the generic drug laws at his 1984 but are those of you that remember if they've generic drugs available to the public and it made them affordable for millions of people. but that meant companies if they had to sell products more cheaply were looking for a place to make them more cheaply so they picketed east to asia but at that time they were not equipped to oversee and regulate the global industry and what else was happening in the research is very boring life when you find all kind of things on the internet late at night and one of the interesting things i found was a memo
written by a dedicate very dedia employee, a chemist and he asked the question or said we have no idea where of peaceful strikes active ingredients are coming from and they could get to the president. so we have a point of time in the united states where it was the wild west. and we didn't know where some of these products were coming from. let's fast forward a year 2000 and it it's triggered the u.s. dependence on china and that's where congress and the white house agreed to grant china access to the u.s. market. it's fascinating to see in a short period of time after that but the penicillin cartel was
formed and was up and running the united states closed its last manufacturing plant dumped on the u.s. market and the local producer couldn't compete without a business. it's something very important that also happened in 2004. a major healthcare company in the united states switched suppliers is a very important ingredient for a product they make and that is called pepper in debate -- heperin and it's a blood thinner. if you've been to a hospital you probably have it. a couple of years after baxter switched suppliers from the u.s. to be china-based supplier, it turns out it was the contaminated ingredient was
found in the heperin product. it came from china and that there was deliberate contamination for economically motivated reasons and that there were 250 deaths in the united states associated with that contaminated the heperin. that triggered extraordinary reform, good progress to try to fix what we basically had a cd with deregulated environment in the countries where we were getting our madison. but it still was far from perfect. there's a couple of lessons here. first the globalization has effectively been a form of deregulation. you don't need the law to change the structure just move production overseas and effectively deregulate. think about this. the united states has had the highest gold standard.
the good people at the fda industry developed to ensure high-quality safe medicines every time. they've had fewer standards and it's really remarkable. back in this period in 2007, some of you might member that is report where the head of the chinese equivalent of the fda in china was executed for taking bribes and government officials said we are still at a very early stage of being able to manufacture high-quality medicines. but that didn't stop the market moving to a place that if is college that had very few standards. really it was a remarkable transition. the other thing that is fascinating, and again the lack
of transparency it turned out we had a trade deficit with china at least in 2014. and i've never seen a public official in the united states acknowledged that we have a trade deficit in pharmaceutica pharmaceuticals. maybe it's there and i would love to see it if you've caught got aglimpse of it please send o me that where we did find the data point was in the speech that doctor margaret gave to a group that were probably very happy to hear there was a trade deficit with the united states and china and the pharmaceuticals. so, we have a lack of transparency. how dependent are we on china? i will give you a couple of fascinating examples. in 2015, the fda inspected a plant in china that was because it was getting a lot of customer complaints, presumably industry
complaints about the active ingredients that they are getting from the plant. it was bacterial contamination at some of the products didn't have the full therapeutic value for which it is an antibiotic or chemotherapy, that could be devastating. the fda went in and found what they called systemic data manipulation. this is a plant with the chinese fda and other inspections over many years. so they banned 29 different products from coming into the united states. but because the united states is so dependent, the fda had to exempt 14 of the products from its own ban and some of those included antibiotics were in the audience for antibiotics and ingredients for chemotherapy because the fda was concerned about drug shortages here in the united states. that's how the pen and they are as a country.
there was a fascinating story about the availability of the anthrax attacks. some of you might remember here washington and new york the u.s. military needed to buy a whole lot so they went to a very reputable company in europe this was reported in bloomberg and in the course of writing that i spokthe book ispoke to the ceo y and they said yes he had to get the starting material from china. so think of it the military needed this after the attacks into the starting material was obtained from china and as someone from the industry said that if china is the anthrax attacker, medicine can be used as a strategic weapon. then there's other examples when india said maybe our military is dependent on the adversaries for medicine i thought about the united states.
so i called up the defense department and communicate it to the logistics agency that purchases this on behalf of the military and its family members and retirees and acknowledged beginning in 2012 that he had to begin purchasing a limited number of drug products from china apparently because there wasn't any other sports. and what about the veterans? veterans hospitals now have the federal government has made it easier to purchase drugs made in china simply because that is where the commercial market is going. what about the risks of wax what are the hidden costs of cheap drugs? we don't see them but in china they identify with some of these far. what about consumer protection
and product liability? i called up a un-american lawyer that works in china and advises the companies that he says you have to understand the price. the attitude is one of the reasons the product is so cheap is because they assume no liability for it. it's buyer beware. so, let's take an example is a you take a medicine that is made in china and sold in the united states by a distributor and the chances are that distributor has no financial asset and you effectively have no legal recourse. it's the lack of consumer protection. and then what does it find a there's a plant thathere is a pg
an epilepsy product. and it lacked any control system to save money. the employees open the window but it's supposed to be made under a cu temperature controlld environment, another cost of cheap drugs. the fda went into a plant that makes heperin or a sedative and what it found was the company that was making it wasn't the actual manufacture, the real manufacturer is another company that apparently it was to hospital complicity in the heperin tragedy from years before.
one of the things we found in doing this research is even american companies that have plants in china don't meet the standards that w we've all comeo expect. they went into the plant in china and because it had no handwashing facilities and it was an opium hitting the floor. there were the highest standards in the world to a place that's still in the growth trajectory. it will take time for those that work in quality control and the
improvement. it takes a long time to build the standards and safety and to sustain it. so those are some of the risks that they face. where do we begin. we need a change in the mindset of the medicine. right now there is a commodity no different than a t-shirt. how can we buy them at the cheapest possible price eve evea few cents difference on a 50-pound drum of product lacks a. it's a strategic asset just like the energy supplies. let's treat them like a strategic asset. the second to think we need to do is set up a tracking and forecasting system.
we do this for energy and you can go on the website and the track this. it's something that a country will fall apart if we don't have it. they are made by private companies, but they serve a very important public purpose and so we have to work more together to ensure that we have our medicines and control over the supplies over those do we rely on everything they do today. it takes knowledge, skill and experience and we can't let that go.
a person that runs the manufacturing plant for a brand-name drug and we do everything right. we see people coming to look for the job that come from other plants and they said the company built a new plant and they are not even using it. they are moving east into this person wonders who is going to do this when i retire. what is going to happen to the companies that they could end up having public relations and marketing and pr without any substance. we can't let that happen. i will stop there. i just want to say we are here at the university. it opens up a whole landscape and i truly hope that there are students and faculty here and that we dig deeper and keep this on the radar and we understand what's going on in this very important market and we can only do that if more people interested so thank you very
much and i hope you'll buy a copy. tell your family and friends. it took three and a half years to do this research. it's not a transparent industry so thank you. >> before going into that i just want to thank you very much for all of your research and for bringing this discussion forward in a way that it's a bit of a wake-up call for many of us in terms of realizing that this is a very real issue in terms of health medicine in this country. and i thought maybe i would first turn over to dan appeared on a panel with us. he's the former commissioner of the u.s. china economic security commission. that's the industrial policies in china and i think that we are all aware and today's current
political context there's a lot of concern over the globalization of trade and commerce and of concern about the movement of manufacturing overseas. can you give us a perspective on how this has occurred from medicines in particular but also for other things that are so its continuing in this current era that we are in today. >> this is a country that supplies almost all medicine and steals between 250 to $600 billion a year according to the fbi. a country that subsidizes their advanced manufacturing industries which includes pharmaceuticals in violation of
trade law. a country that protects the domestic advanced manufacturing industries in violation of the trade clause and the country who forces technology transfers from foreign companies doing business in china in violation of the trade off. it's the advanced manufacturing companies, 98 in the last four years and is done on a strategic basis where we are prohibited from buying their advanced manufacturing. in a company that uses trade as a weapon three years ago the chinese seized an island off the coast of the philippines known as scarborough and it arose between the philippine coast
guard and chinese navy overnight to try to cancel all of the banana shipments into china and that is the 10% of the philippine economy. about ten years ago they seized a chinese fishing vessels and arrested the crew and they stopped shipping the minerals. a. the ship is continued. so, this is a country that we have not become dependent upon for drugs and what's at stake is we are moving from a relationship.
the chinese have one aircraft carrier. they are building three more aircraft carriers and i into thr and offensive weapon. they are building ports over asia. they are seizing on the ones in the east and south china seas and belonged to the philippines and japan and vietnam and militarizing the island. they are militarizing space and now have the capacity to take out or gps system. in addition to that, they are spending hundreds of billions of dollars in improving the military. they are rapidly reaching parity with us on the fighter jets, submarines and missiles.
it's what this may lead to and i speak over the country and i always say that i met the enemy and it is in china. the enemy is us. shame on us for allowing this irresponsible business procedure to proceed with such a critical component as our truck system. so, my hope is that we can raise the alarm and start to pressure our congress to do something in a responsible way to protect the american people, and i will stop there. >> the way that i first became aware when it was contaminated i
learned that all of it is coming from china and most manchin it's a blood thinner but most people are not aware that it's more than that. you cannot have them if they clot. when they flush it is a helper heperin flush so it is essential not only for people who needed is a blood thinner but actually anybody that needs an intravenous drug heperin. and so, it is hard for me to understand how that could have happened. could it have happened if it's
something that essential and basic to medical care could wind up being completely offshore here. >> heperin comes from [inaudible] what was going on there became a from the small villages in china that were pulling these animals out in very unsanitary conditions and literally many of them have no running water and then shipping them to distributors and ultimately it wound up in chicago. and it was from that basis that the problem developed. the fda is trying to get in sections on site and they have severely restricted the number of inspectors they would allow and it has become completely ineffective.
>> if you are talking about hundreds of thousands of households involved in the production of the product, it would seem to me that it would be a very difficult one to inspect. it wouldn't have much of any enforcement at all. do you have a comment on the? >> to do in fda inspection here in the united states is different from an inspection 10,000 miles away. but i think that the real issue is what happened with the world's largest producer. i know you are familiar with this transaction. so, where d, where'd all those contestants go from smithfield here in virginia and by the way, if you have sunday morning bacon or ham on new year's day or go to mcdonald's for sausage, it is coming from smithfield which is now owned by a chinese company. so, we had a problem and if you
want to talk about that because smithfield controlled a very significant portion of the population here in the united states and then that company was sold to china and we potentially lost but we don't know if congress has no authority over them to ask so where are you sending them, are you shipping them over to china or are they stating here in the united states to mak to make this bookg called heperin. >> if you could imagine smithfield was the largest producer of pork in the united states, 36% of the pork market in a company that bought them anoften and paida huge 30% prem. pork is 50% of the diet in china. china is the only country in the world that has a pork reserve.
agriculture. the real problem is that now the port just comes back into the united states with the smithfield label so you have no idea what you are really eating. we have a lot in the united states there 18 exemptions to the cool law. it could say packaged in the united states are processed in the united states but ultimately it comes from china. i know from testimony 85 percent of total off be a -
- tilapia is raised in contaminated waters. so we have a problem to know what we are even buying. and the issue should they allow the sale to take place under a law called sify us and ultimately it was determined by congress it was not a national security item. >> so let's turn now the former assistant secretary at us department of commerce and with the international trade administration. before this project we were talking about the
administration at the time the wto was created and in geneva and with that wto in fact there were a lot of concerned members. but most of us at that time were quite optimistic particularly about the process of china and in international trade agreement there is a potential risk but potential upside and and five years later what is the upshot of all of that? had that met our expectations?
>> first i went to china in 1981. there was a horribly stricken country. it is the century of humiliation by the western powers beginning with the opium war the second opium more, the fall of the emperor, japanese invasion, the whole thing fell apart. and now trying to build a communist country it didn't work to keep the economy going and then they took over in 1979 for foreign technology in foreign know-how in foreign markets so we will get our wealth and power back they
want it back they were number one for centuries. so now being subjected to a lot of countries, the wto was created until 93 when the wto was created. i was there in geneva i wasn't optimistic it would work i was there to keep financial services out of it. we did not want financial services because there is something that it could be tied to china with the most favored nation treatment. china did not come into the wto when it was created. they came in 2000.
now because china was a communist country they cannot commit more than one year at a time that said we could not give them more than when you're at a time. but why they wanted to get in they wanted permanent and that met congress had to change our law. the congress has debated to do so and all the while being will increase american exports to china. in china came into the wto in 2001 they came in and congress gave it to them the bush administration brought them in 2001 so it was bipartisan both parties were a part of it there was an 80 billion-dollar trade deficit with china right now $300 billion trade deficit
congress said it would help the american exports and decrease the trade deficit but it did no not. the whole thing was about investment to give china permanent msn it was about american companies investing in china both with the chinese market to send their stuff back here. why? i was general counsel of the senate finance committee i saw it corporation to be a stakeholder and in 1990 the roundtable said their responsibilities to their employees and communities and
shareholders. and in 1999 it was to their shareholders. and their own compensation is tied to their ability for who was wealthy so american corporations and china is now in the wto with two.5 percent that does not mean we should ship to china we think about 11 percent tariffs so that doesn't mean you get the best trading partner. so the incentive is for american companies to go to china and shipped back to hear. if you read the book the other
one - - author put together that's exactly what happened these companies have very high level people in this country and were taking those jobs to china and that is what is driving this. the former chairman of the sloan foundation has written extensively on this whole issue from stakeholder to shareholder. because as you see the ceo is to make 50 times now for 500 times the average worker. it's among a very small group in the country and they are undermining the average middle-class job in this
country this is a very important issue if you point out the implications of what we are doing the american people know something is happening and trump talked about this issue i'm not sure he has all the policies in place to address it because unless you deal with corporate governance you can't handle that. is that helpful? >> so we know particularly to contain a tremendous amount of intellectual property but also an enormous investment and then the crisis in the drugs and the research and nih.
i'm happy to see the world benefiting from that but now were in this. where it is an interest of conflict between our country and china that we see this succession of care and so tell us why to be targeted for tariffs and the impact might be. >> pharmaceuticals are biomedical is called project 2025. there are ten key industries in terms of satisfying their own market. and they are pumping subsidies and stealing intellectual property from american
companies when american companies invest in china it is required to be done through a joint venture plus they say if you want to do well in china you should be considered a friend of china to get better treatment so what the administration is doing is section three oh one of the trade thought so if we identify unfair trade practices we can identify that with tariffs that's what bob light heiser and this administration says you are subsidizing we will start restricting their access to the american market because we will not get access to your
market for what we could do here at home when right now with the wto four.2 trillion dollars of trade deficits with china. do trade deficits really matter? one is not exports if you run negative net exports 750 billion manufacturing that is detrimental with wealth and the economy so with that situation we have to get into corporate governance.
>> it's hard for me to understand but one thing fundamentally that the prices is tied to the cost of medical and the differential between what we pay compared to what they pay in canada or europe or australia but there is some hope to reverse the flow? are there other policies we have to do for other solutions on the horizon? >> one of the reason drug prices can be so high in the united states has nothing to do with china but her own internal market manipulation
and if you're watching all the middlemen and middle women from the point the drug is manufactured to the point picking up at the pharmacy there was a lot going on. what should be open competition has been turned upside down and a lot of people are making a lot of money off of the middle class i can make drug prices so very high. >> so if you have insurance that we see the price is $425 but then what we pay so how is this 90 percent of negotiations.
>> so my is the best disinfectant and we need to be 120 degrees for on drug prices because we don't have it now. or to organize that constituency for that transparency that is what we need to be at a point that patrick was making the impact of the loss of industries and communities. in the book i talk about where pfizer had substantial operations with its research program because when drugs went off patent in lipitor went off patent and pfizer was investing in china billions of dollars for research and development you see what happens pfizer step back to have very substantial layoffs.
and what did that due to local economy? i spoke to people who work in real estate and the guy who runs the bowling alley. a gentle man who has an insurance company. and he describes what is happened in the housing crisis in the jobs and the guy from the bowling alley said it has happened with all of these layoffs with industry offshore losing patent protection and to see an increase of drug use and it's changing and it's changing rapidly. just a couple weeks ago i called the gentleman who i interviewed who left his insurance company there he says i have to tell you i had to shut down the business. it is having a profound effect on communities the united states will hear in the major newspapers but it is
devastating to people in these are very highly trained people we need more in the star field. but some of them are devastated and meanwhile companies are setting up high investments in china so we have the dramatic dislocations of a huge impact on the economy in the final points we have to decide is a country do we want to have an industry of pharmaceuticals here in the united states? do we want to maintain that manufacturing capability? if the answer is no then we are good to go. but if the answer is yes then what do we need to do differently? and that's how we stimulate a conversation. >> let me read something from
the book. among the 70000 us plants since china joined the wto in 2001 there has been a tremendous outsourcing of us capabilities everybody says we will be innovators but when you're not making things you will not be the innovators. they will be. and we say we get the cheaper jobs they are in the position to control the price of the drugs if they are the supplier if they are in the monopoly position you are on a very hazardous road with this country.
there is a huge problem and it goes on of both parties. >> that's why like the issue of medicine because to identify with steel and autos and aluminum but they can identify with the pills that we put in our mouth and what we rely on for infections that arguably we need these other things with all kinds of healthcare but again with these issues of the intersection for trade in the things that were described how china is actually saturating the markets and then using the
machine to enforce. >> fortunately the rules were set up with the wto on the basis everybody would follow the rules. and the chinese chose to only follow the rules that benefit them but they are so slow and so difficult to enforce it is an effective and in addition to that to have american companies that are so intimidated we cannot even get them to file a complaint. if they imported an automobile into the united states tariff
was two.5 percent if we import into china it is 55 percent. and auto-parts is 20 percent. why are we complaining? because we can't get auto companies because they are so intimidated by the chinese government because they have to file. >> and official would not have standing. >> but you have to provide government with the information to bring your case and they are hesitant because the chinese will punish them if they provide the government with the information many won't even testify so they are not identified before the commission and in the congress
i have seen this up close. boeing says you have to make part of the plane and we used to think what is this that you cannot do technology transfer but they completely ignore those. they don't listen to the companies they do that on the road. one because it makes a shareholders wealthier but very short-term problem. >> i would have each of you comment trying to think constructively that we have
gone down a path. >> the united states that is process oriented and for the most part where china the end justifies the means and is fostered by the chinese government. so you have these two different systems. we are the only industrialized country in the world that doesn't have an industrial policy.
and then to subsidize advanced manufacturing industries into completely wiped out the electronics industry. the entire industry is moved to china. and now we lost entire semi conductor industry. and with the global foundries to call the president of the company up and says the chinese offered us free use of
a 4 billion-dollar chip manufacturing plant no taxes for ten years. they go on and on. i even know who to talk to the us government. and of course the incentives are so great and we are doing this and then to incentivize. but we had to get the corporate income taxes down in those corporate income tax in china.
so we were way out of whack but there are lots of things he was government could do to incentivize these companies we were incentivizing them to move if you were a prophet overseas was not subject to corporate income taxes then to repatriate the money. >> so the answer is then to incentivize drug companies to manufacture here. and with those r&d facilities in the software industry and semi conductor industry that
they cannot find enough electrical engineers they have plenty of electrical engineers in china the one thing the us government could do is we would pay your tuition and reimburse your tuition if you stay here and work. otherwise we will lose artificial intelligence. and supercomputing. but the other thing that we are doing is supercomputing of the basis it is a supercomputing station and up
until a few years ago the united states led the war was supercomputers. two years ago the chinese exceeded the united states so they cut the budget. so i met the enemy and is not china. that just harm us and for 150 years we didn't have to have industrial policy. but if we don't do anything with these industries we will lose them. >> warren buffett wrote a famous article about the trade
and once you set the goal then you can figure out how to do it. >> what's really hurting this country are the buybacks. buybacks or what corporations buy their stock. ronald reagan changed the security law that prohibited corporations from doing that because they artificially inflated stock. tens of billions of dollars of stock or water back by corporations. that means instead of those revenues being used to grow the company was put in for the rmd is going back to the
stockholders it hurts the economy and the country and that is a major law that we need to put into place. that's how the priorities are. you talk about china subsidizing the manufacture of drugs and conductors and we subsidized sugar. and that's very sad. rosemary, i'm going to give it to you to talk about the path forward. >> the reason i wrote this so my mother and father could read it is we have to bring in what i call the commonsense norms of
all ordinary people, and if you look at the media today there are more stories about getting of getting your drugs from a canada than there are stories about the reality of what's happening to the drug supply. there's a story that has been hitting that frankly they don't want us to know so i think that we have to call in and expand the conversation to know that the people that come to washington its inner circle with a small group of people making the policies that created the situation we have now and it's not working for ordinary people. >> i hope with this book we can expand the conversation with people who know something isn't right. one of you said that. the american public knows there's just something not right but they are not being educated because frankly we have had a news blackout. you can't get this topic on the nightly news and a lot of the mainstream media and so how can
we find alternative news sources across the spectrum? this isn't a democratic or republican issue. it affects all of us. if you so that is what we intend to do and if there are places where you have it in your work and other planes they can have thiwe can havethis conversations know. i've been so impressed how much ordinary people coming and evene in the industry who can't speak publicly that they know we have a serious problem, there are good people in the companies who don't like the fact there's a plant with their company name on it where the bathroom i is a hoe in the floor. i can't imagine any person who likes that situation so how can we draw on those and change the conversation and inform the people to do the right thing
thank you very much. >> thank you. [applause] >> we have a couple minutes if we have any questions in the audience there's a couple of microphones in the aisle. i see somebody coming forward. if you don't mind, just introduce your self. >> after the case brought by the u.s. trade representative and the anticipated move a 45 pages of proposed tariffs and they included a lot of chemicals for pharmaceuticals. i wonder if you have seen the list and whether it you would incentivize or have a perverse effect.
>> my understanding of what's being used is to focus on the industry's china has put in project 2025 committees are 202e high-tech industries as word talked about among them is biotechnology. so, if you put those industries out and the subsidies the chinese are giving to those industries, secondly, the point you make them more expensive and wiping out our people so that we get the chance to move up the food chain and have those products developed here. my understanding is that is what they are trying to focus on the project 2025.
>> building off of that, it sounds like they are not the answer to reducing its the pharmaceutical sectors and critical minerals used in the products. what other congressional solutions do you think are available including incentives in the tax bill and are there sort of any congressional you mentioned putting pressure on congress. what are some ways that you see doing that? >> are you speaking to me or -- >> anybody. >> one thing congress can do is make sure they are critical to the national security of the united states and those must be a certain amount of time must be
made here. we can't be 100% dependent and so one thing the congress can do is identify those critical drugs that require them to be made here and maybe the issue some kind of subsidies but that would protect us from any adversarial action in china ma china may wae next year or five years from n now. >> the case of herparin, there are researchers making progress so we don't have to rely on pigs and china for it but to turn the synthetic product in favor of isn't good because currently herparin but they have now is still very cheap so the market isn't aligned to want to buy a more expensive product tha but e public investment that is very
targeted into strategic on essential medicines, we need to think about the public investment in research to protect us from dislocations and supplies. >> for the pandemic preparedness we have the government stockpile certain products, not just of drugs that other products to be there in case of a major pandemic so it isn't the concept of the national interest having the availability and they would sei would sayalso in the case oe risk of disease on the capital and would be sensible to stop
using cows to make a printer that could herparin. you get a lot more heparin and when they stopped this usage, it kind of shifted to be done with the pigs. which is to say we had a better way and people have been working on it to monitor and to detect very low levels. you could see that it was safe and it would be more efficient. to talk about those things like that isn't a very pretty picture. >> as i said i was the general counsel of the committee when we did the trade bill and that is 30 years ago and jim wright was
the speaker they charge each committee to look at areas under their jurisdiction and to hearings and to develop ideas of how to make the u.s. are competitive. we haven't done it in 30 years. i think congress needs to get into this business can't do the hearings and to develop the different professions of law to help us compete better in a global economy. and that trade bill recover for the first time there are a lot of great things in that bill. two more questions. >> if you could elaborate the
we have been hearing for a while that 40% of the drug products but that number hasn't been updated since between that and the labeling tha label would say has to stay where its manufacture or who labeled it a. of the numbers that are out there are old and i think they obfuscate. where the data points came from if they work in the industry they frankly talk about how in fact dependent we are. and we don't have good official numbers and have to ask the question why not a.
to really pinpoint the amount of dependence that we really have. the data points came from interviewing people in the field who said. we do risk assessments by country and the plant. we don't do that in the public interest. the commercial database says they don't have this in the public interest, and it's nobody's job in the federal government to do that and that
is stunning. we wouldn't allow that for food or oil or energy supplies that wsupplies but weallowed for med. there's a lot of people that don't want us to get into this in terms of its proprietary trade secrets. national security should take precedence over that so we have to open up that big can of worms and shine a light with a 180-degree sunlight. >> it is actually quite complicated industry. it's been used to formulate them and i think what we see on the containers is where they were packaged and so you don't really have a way of understanding where there was in grade in fore before they were actually packaged into the final product.
>> there's conflicting laws that require companies to put on the packaging but what a gem that is defined as where does the active ingredients come from. so, it comes in the country, you have to label where the active ingredient comes from so we have that information included some wear and we don't use it very well. i don't know how many people actually know it and then there's fda rules and they allow a wild west. it could be the packager which is different than the customs package. it is a complicated system of. it's where you can see the label of the medicine and in some cases they indicate who is the manufacturer, where it was
manufactured and in some cases even the active ingredients and if you can't find that from the label you can call if your company given the breakdown does the fda know where these things are made and adjudicate do they? >> when i did the commission, one of the things we found out was like wal-mart if you want to stay in our supply chain you better move to china to meet lower-cost. are they pressuring the american companies like pfizer and others
to move the obligation to stay in the supply-chain or how does this work? >> i don't have an answer to that but there is a hammering down on manufacturers, and we can't underestimate what it takes to run the high-quality manufacturing facility in. they make sure that we have the lowest possible price and any challenge between quality and safety and too often safety doesn't win. it is so complex. >> there would be congressional hearings on something like this. >> would love the members of congress to have the courage to do that. >> again i just want to thank